Final Results

RNS Number : 5353M

North Atlantic Smlr Co Inv Tst PLC

25 May 2010

North Atlantic Smaller Companies Investment Trust plc ('NASCIT')

Annual Financial Report for the year ended 31 January 2010

NASCIT is pleased to announce its audited results for the year ended 31 January 2010.

financial highlights

		2010	% change	2009	2008	2007	2006
revenue
Gross income (£'000)		3,525	(17.7)	4,285	5,208	3,951	4,052
Net revenue after tax attributable to Shareholders of the Parent (£'000)		443	(17.7)	538	1,272	224	876
Basic return per Ordinary Share	- revenue	2.99p	(17.9)	3.64p	8.86p	1.65p	6.66p
	- capital	289.45p	177.7	(372.41)p	(21.05)p	229.52p	339.44p
assets
Total assets less current liabilities (£'000)		219,613	23.2	178,284	238,166	250,549	221,122
Net asset value per 5p Ordinary Share:
Basic		1,480p	22.9	1,204p	1,611p	1,755p	1,597p
Diluted		1,169p	23.8	944p	1,209p	1,217p	1,063p

Mid-market price of the 5p Ordinary Shares
at 31 January		814.0p	31.6	618.5p	1,025.0p	1,153.0p	1,022.5p

discount to diluted net asset value		30.4%	(4.1)	34.5%	15.2%	5.3%	3.8%
indices and exchange rates at 31 January
Standard & Poor's 500 Composite Index		1,073.9	30.0	825.9	1,378.6	1,438.2	1,280.1
Russell 2000 Index		602.0	35.7	443.5	713.3	800.3	733.2
US Dollar/Sterling exchange rate		1.6024	11.1	1.4417	1.9880	1.9574	1.7774
Standard & Poor's 500 Composite - Sterling adjusted		671.8	18.3	568.0	693.4	734.8	720.2
Russell 2000 - Sterling adjusted		376.6	23.4	305.1	358.8	408.9	412.5
FTSE All-Share Index		2,660.5	28.0	2,078.9	3,000.1	3,211.8	2,928.6

corporate summary

introduction North Atlantic Smaller Companies Investment Trust plc (NASCIT) is an investment trust whose shares are listed on the London Stock Exchange.

objective and The objective of the Company is to provide capital appreciation through investment in a

investment strategy portfolio of smaller companies principally based in countries bordering the North Atlantic Ocean. The Company invests in both listed and unlisted companies.

company's business The Company is an investment company within the meaning of Section 833 of the Companies Act 2006 and its business is that of an investment trust. The business of the Company's subsidiary undertaking is an investment dealing and holding company.

risk Investment in small companies is generally perceived to carry a greater risk than investment in large companies. This is reasonable when comparing individual companies, but is much less so when comparing the volatility of returns from a diversified portfolio of small and large companies. The Board believe that the Company's portfolio is diversified. Since returns from large and small companies vary, there is an opportunity for investors to reduce overall risk by holding a portfolio containing both large and small companies together.

The Company has the ability to utilise gearing in the form of term loan facilities. Gearing has the effect of accentuating market falls and gains. Details of the Company's debt is shown in Note 8 below.

The Company outsources all of its main operational activities to recognised third party providers.

AIC The Company is a member of the Association of Investment Companies ("AIC").

joint managers The Joint Managers are Christopher Mills through Growth Financial Services Limited ("GFS") and North Atlantic Value LLP.

company secretary The Company Secretary is J O Hambro Capital Management Limited, Ground Floor, Ryder Court, 14 Ryder Street, London SW1Y 6QB.

website www.navalue.co.uk

chairman's statement

It is pleasing to report that the diluted net asset value of the Company rose by 23.8% during the twelve months ended 31 January 2010 compared to a rise in the Sterling adjusted Standard & Poor's Composite Index of 18.3% over the same period. The value of the Company's shares rose by 31.6%.

The revenue account showed a profit after taxation of £443,000 (2009: £538,000). Consistent with the Company's long-standing policy, the Directors are not recommending the payment of a dividend (2009: nil).

During the year, the Company redeemed 250,000 units of Convertible Unsecured Loan Stock 2013 for cancellation at a discount to net asset value.

A commentary on the quoted and unquoted portfolios can be found in the Investment Managers' Report below. However, it would be remiss if I failed to point out that a significant part of the return for the year was achieved by specific actions of the Investment Manager, rather than through the recovery in the overall level of the stock market.

outlook In last year's outlook section of the Chairman's Statement penned by my predecessor, Enrique Foster Gittes, it was stated that equities were unlikely to perform well facing the twin headwinds of non-existent economic growth and a banking system which was effectively frozen. Equity markets did however perform well as the combination of massive government stimulus and a return of the private investor to equity markets created a rebound despite degenerating economic fundamentals. Notwithstanding these facts, there remain structural imbalances within the US and European economies which will not be easily resolved. Quantitative easing, effectively the printing of money, is coming to an end. Governments will be required to raise money on an unprecedented scale to fund deficits which are at unsustainable levels of National Income. Consumer debt in the Anglo-Saxon nations is still too high and whilst GNP is now recovering, unemployment and business failures continue to climb.

Thus, whilst I do not anticipate a collapse in the stock market during the coming fiscal year, it is likely that any further improvement will be constrained. The Company continues to hold substantial net cash balances and is therefore well placed to benefit from opportunities as they present themselves.

The Hon. Peregrine Moncreiffe Chairman

25 May 2010

investment managers' report

quoted portfolio The portfolio benefited from the recovery in the United Kingdom stock market which boosted a number of the quoted investments. In particular, RPC, BBA, Castle Support Services and Inspired Gaming all performed well during the twelve month period. Nationwide Accident was flat during the year and Communisis was disappointing, recording a significant fall.

In the United States, Smith International and Sterling Construction both performed satisfactorily and were sold during the year.

Fayrewood and Celsis were both taken over in transactions in which the Company participated, yielding profits of £0.5m and £1.9m respectively. In both cases, these transactions are expected to produce further profits as the value of their assets is maximised.

unquoted portfolio The Company successfully acquired GNE Group as a cash shell which, once purchased, was liquidated yielding a profit of approximately £4 million. Hampton Trust successfully realised an intangible asset, realising a profit of over £5 million, although this was partially offset by the need to write down part of the property portfolio. The Company took an opportunity to further increase its holding in Bionostics, whilst our investment in AssetCo Abu Dhabi rose following the award of a major contract in Abu Dhabi, although this was offset by a write down in Payzone. Finally, the valuation of Crendon was reduced to nil reflecting weakness in the industrial property market.

It is expected that the unquoted portfolio will generate further profits in the current year with the investment in Hampton/Alba Investment Properties being slowly liquidated, Avanti bonds likely to be redeemed and Darby and Merchant Properties sold. Finally, further investments held in Trident Private Equity Fund II are likely to be liquidated. The majority of new unquoted investments are likely to be made through Trident Private Equity Fund III.

Christopher H B Mills Chief Executive & Investment Manager

25 May 2010

sector analysis of investments at fair value

	United	United
equities, convertible securities & loan stocks as a % of	States	Kingdom	Europe	Total	Total
total portfolio valuation	31.01.10	31.01.10	31.01.10	31.01.10	31.01.09
	%	%	%	%	%
General Industrials	1.8	16.1		17.9	13.8
Investment Companies	0.6	15.3		15.9	12.6
Manufacturing		10.4		10.4	5.7
Support Services	1.4	6.0	0.6	8.0	13.9
Real Estate		6.9	2.8	9.7	11.6
Healthcare, Equipment & Services	2.6	4.2		6.8	3.4
Transport		5.1		5.1	2.7
Travel & Leisure		5.1		5.1	4.1
Industrial Engineering		4.5		4.5	5.4
Construction & Materials		4.3		4.3	3.0
Media		2.9		2.9	1.7
Communications		2.8		2.8	2.9
Technology Hardware & Equipment	1.4	0.6		2.0	5.3
Oil & Gas Producers	(0.3)*	0.9		0.6	2.0
General Financial		0.1		0.1	0.2
Food Producers		0.1		0.1	0.7
Aerospace and Defence					2.3
Electronic & Electrical Equipment					0.1
	7.5	85.3	3.4	96.2	91.4
treasury bills	3.8			3.8	8.6
total at 31 January 2010	11.3	85.3	3.4	100.0
total at 31 January 2009	20.7	75.2	4.1		100.0

*unexpired put options

twenty largest investments

as at 31 January 2010

equities (including convertibles, loan stocks and related financing)		At fair value
		£'000
Castle Support Services PLC	UK Quoted on AIM	21,700
Bionostics Holdings Limited	USA Unquoted	19,074
Oryx International Growth Fund Limited*†	UK Listed	15,705
BBA Aviation Group	UK Listed	9,906
RPC Group PLC	UK Listed	9,600
Nationwide Accident Repair Services PLC	UK Quoted on AIM	9,000
Gleeson (MJ) Group	UK Listed	8,375
AssetCo Limited (Abu Dhabi)	UK Unquoted	8,252
Orthoproducts Limited	UK Unquoted	8,179
Inspired Gaming Group PLC	UK Quoted on AIM	6,890
ten largest investments		116,681
Trident Private Equity Fund II LP	Cayman Islands Unquoted	6,808
Hampton Trust Group	UK Unquoted	6,100
Chrysalis PLC	UK Listed	5,555
Avanti Communications Group PLC	UK Unquoted (loan notes)	5,531
Martley Limited	Jersey Unquoted	5,502
Trident Private Equity Fund III LP	UK Unquoted	5,266
Alba Investment Properties Limited	UK Unquoted (loan notes)	4,780
Nastor Investments Limited	UK Unquoted	4,084
Performance Chemicals	USA Unquoted	3,415
Glass America	USA Unquoted	2,735
twenty largest investments		166,457
Aggregate of other investments at fair value		21,429
		187,886

USA Treasury Bills		7,489
total value of investments and associates of the group		195,375

* incorporated in Guernsey.

† Oryx is accounted for in the Group accounts as an Associate under the equity method of accounting. The valuation

shown above is the Group's share of Oryx's net assets. All other investments are valued at fair value.

unlisted investments profile

as at 31 January 2010

	2010
	At fair value	Total assets
	£'000	%
Bionostics Holdings Limited (UK) Cost: £11,650,000	19,074	8.4
Bionostics is a specialist developer of medical diagnostic products, principally liquid controsl, that are used to test the accuracy of calibrated blood testing devices. The company had a good year in 2009, beating both the previous year and the budget. Despite the difficult economic environment, trading in the current year is again expected to be in line with the budget. The last twelve months have seen an extraordinary increase in the new long-term orders that will increase sales by over 50% over the next three years. This will have a marked impact on profitability which should grow even faster than sales. Bionostic's debt is less than 2.0x EBITDA with interest cover of circa 5.0x. Equity held: 54.70% Income recognised in the period: nil Financial results per latest audited accounts -Turnover: £17.2m - EBIT: £4.1m
AssetCo Limited (Abu Dhabi) Cost: £6,500,000	8,252	3.6
AssetCo is the leading company in the UK providing support services to the UK fire and rescue services. AssetCo Abu Dhabi is a special purpose vehicle set up to exploit AssetCo's potential to gain significant revenues and profits in the Middle East. The investment has a yield of 6% and carries significant warrants to acquire shares in AssetCo. One contract has now been awarded and further contracts are expected to be announced. Equity held: 9.20% Income recognised in the period: £0.4m Financial results per latest audited accounts -Turnover: £79.7m - EBIT: £17.4m
Orthoproducts Limited (UK) Cost: £5,027,000	8,179	3.6
Orthoproducts is the sole shareholder and holding company of Orthoplastics Limited, one of only two companies in the world which manufactures premium-grade Ultra High Molecular Weight Polyethylene for the orthopaedics industry. In addition, it manufactures components for orthopaedic devices. The company, which has approximately 48% of the world market, had an outstanding year with EBITDA projected to rise by over 150%. New capital was put into the business to significantly increase manufacturing capacity which became available in December 2009. The company also acquired a complementary business in orthopaedic metal components, LPE Medical Limited, which was largely funded with equity. Equity held: 40.00% Income recognised in the period: £0.2m Financial results per latest audited accounts -Turnover: £11.2m - EBIT: £1.7m
Trident Private Equity Fund II LP (Cayman Islands) Cost: £0*	6,808	3.0
Trident Private Equity Fund II LP (TPE II) is a £64 million offshore private equity limited partnership. The fund's investment objective is to generate high absolute returns by investing in a portfolio of unquoted investments in small to medium sized companies in the UK. The fund concentrates primarily on leveraged buyouts and similar transactions, including public-to-private and pre IPO investments. At 31 January 2010, 100% of NASCIT's commitment, had been drawn down and invested in fifteen private equity transactions, of which six have been realised. To date, the Company has received £2,728,000 in excess of costs in distributions from TPE II. Equity held: 15.60% Income recognised in the period: £1.5m Financial results per latest audited accounts -Turnover: n/a - EBIT: n/a * £10m received in distributions has been allocated against cost reducing this to nil.
Hampton Trust Group (UK) Cost: £7,440,000	6,100	2.7
Hampton completed the refinancing of its long-term senior debt facility during the course of the year. This refinancing was possible because of the resilience of Hampton Group's underlying investment portfolio to the unprecedented market conditions witnessed in the real estate sector in the previous two years. Occupancy levels have at all times remained at a level in excess of 90% and interest cover remains at a multiple of 4.3x, which is exceptional given the granular nature of certain elements of the portfolio. Despite this however, a further write down was taken during the year to reflect the continued downward pressures on pricing. Equity held: 72.00% Income recognised in the period: £0.4m Financial results per latest audited accounts -Turnover: £2.4m - EBIT: £0.9m
Avanti Communications Group PLC (UK) Cost: £5,499,000	5,531	2.4
Avanti Communications supplies fixed satellite communications services to business, institutional and residential customers in the UK, Europe and the Middle East including broadband and data connectivity through satellite capacity leased from third parties. During the year, the company raised over £100 million in new equity to support its business plans. The company had made excellent progress in contracting with wholesale partners in Europe and has won several regional government projects whereby government funds the cost of installing a fixed number of rural customers. The launch of the HYLAS satellite is now expected in 2010. Equity held: n/a Income recognised in the period: £0.7m Financial results per latest audited accounts -Turnover: £8.0m - EBIT: (£1.4m)
Martley Limited (Jersey) Cost: £4,812,000	5,502	2.4
Martley Limited is a Jersey registered property company. Through its Luxembourg subsidiary companies, it invests in commercial property in Europe. The company part owns five properties within a Luxembourg based office park constructed in 2003. The gross lettable area totals approximately 21,500 square feet. The properties are fully let and tenants include several blue chip international companies. Since the investment was made, substantial amounts of debt have been repaid, and the fund has begun returning money to investors. Equity held: 30.77% Income recognised in the period: £0.3m Financial results per latest audited accounts -Turnover: £5.8m - EBIT: (£9.5m)
Trident Private Equity Fund III LP (UK) Cost: £5,266,000	5,266	2.3
The Company has made a £25 million commitment to TPE III with just over £5 million drawn down. TPE III will continue the successful policy achieved by TPE II, investing in small UK-based buyouts. To date one investment has been made. Equity held: 52.70% Income recognised in the period: - Financial results per latest audited accounts -Turnover: n/a - EBIT: n/a
Alba Group (UK) Cost: £4,780,000	4,780	2.1
Alba was formed to acquire a portfolio of 16 properties that were formerly owned by the WG Mitchell Group and had been placed into administration with Ernst & Young LLP. The assets are largely based in Scotland and present a significant opportunity to deliver enhanced value and returns through proactive asset management and reinvestment. The acquisition is effectively a joint venture with the Royal Bank of Scotland PLC. Equity held: - Income recognised in the period: - Financial results per latest audited accounts -Turnover: n/a - EBIT: n/a
Nastor Investments Limited Cost: £4,188,000	4,084	1.8
Nastor is the holding company for Celsis, which was acquired in September 2009. Celsis is a world leader in the rapid detection of pathogens in liquids. Other divisions include providing products for pharmaceutical research and testing. The company has performed better than expected since acquisition. Equity held: 17.00% Income recognised in the period: - Financial results per latest audited accounts -Turnover: £36.3m - EBIT: £9.2m
Ten largest unlisted investments	73,576

	2010
	At fair value
	£'000
Brought forward	73,576
Performance Chemicals Cost: £3,703,000	3,415
The company was set up to consolidate three small businesses providing speciality chemicals to the oil and gas production industry in the USA. Operating profits were initially disappointing but there has since been a recovery. The company has no bank debt.
Glass America (USA) Cost: £2,360,000	2,735
Glass America is a consolidator of automotive glass repair companies in the United States. The company traded well in 2009 and further progress is expected in the current year.
Telos Corporation (USA) Cost: £1,365,000	2,680
Telos is a provider of IT solutions to the US Federal government, the military, the intelligence community and commercial enterprises. The company has continued to perform strongly and has virtually no debt. It is expected that part of our investment in the preference shares will be redeemed this year. The company intends to sell itself as and when market conditions improve.
Merchant Properties Unit Trust (UK) Cost: £2,717,000	1,989
The Merchant Properties Unit Trust is a portfolio of 30 Travis Perkins trade counter units purchased for £32.5m and simultaneously let back to Travis Perkins on 25-year leases with fixed uplifts at 3% p.a., reflecting an initial yield of 6%. The shares were written up during the year reflecting a modest recovery in the property market.
Indicant Cost: £812,000	1,904
The Company is the largest owner of snooker halls in the United Kingdom, trading under the Riley's brand name. Although the business has been impacted by the recession, EBITDA and cash flow are substantially positive and are expected to improve further in the current year.
Forefront Group (UK) Cost: £1,762,000	1,762
Forefront is a specialist civil engineering business focusing primarily on the gas supply industry. The company undertakes gas mains replacement and repair and the laying of new mains and is one of only three UK companies with the necessary equipment and trained operatives to undertake the inhibition of gas flow whilst 'in situ' gas mains are replaced or repaired. Forefront has a dominant position in eastern Greater London. Performance in 2009 was good and we expect further progress in the current year which should lead to a liquidity event within the next eighteen months.
Browallia LLP (UK) Cost: £1,204,000	1,196
Browallia purchased Darby Glass Limited, the UK's largest independent supplier of insulating glass units and street furniture to both the commercial and domestic marketplace. It has sold off operations and returned capital to the Company. It is expected that the balance of the assets will be sold over the next few months yielding a profit above the current valuation.
Letchworth Investments Limited (UK) Cost: £604,000	1,080
Letchworth is the holding company used to acquire Fayrewood. The company is in the process of selling all of its assets and quantifying liabilities. It is expected that the company will be liquidated over the next eighteen months.
Kiln Lane, Immingham (UK) Cost: £862,000	626
This is a 53,000 square feet industrial unit on an 18.1 acre site at the Kiln Lane Industrial Estate. The head lease holder has paid substantial sums for dilapidation whilst it is expected that Paragon Automotive Limited will shortly enter into a new ten year lease. It is intended that when this occurs, the property will be sold. The Company owns 88% of Kiln Lane, but the Board has chosen not to consolidate on the basis of non-materiality.
Ramen Holdings Limited (UK) Cost: £418,000	200
Ramen is the holding company for Wagamama restaurants, which continues to grow and perform well. At the end of 2009, there were 65 restaurants open in the UK, as well as 37 sites open under franchise outside the UK.
Other unlisted investments	3,504

Total value of unlisted investments at fair value*	94,667

* Includes unlisted loan notes in these companies with a total value of £14,468,000.

unlisted investments profile (aim quoted)

as at 31 January 2010

	2010
	At bid value
	£'000
Castle Support Services PLC Cost: £4,326,000	21,700
Castle Support Services announced its results for the year ended 30 June 2009 and reported that revenue for the year had increased by approximately 8% to £25.5 million, whilst operating profit had improved by approximately 10% to £17.4 million. Although UK operations have been impacted by the recession, overseas operations remain strong. The company has no debt.
Nationwide Accident Repair Services PLC Cost: £2,582,000	9,000
Nationwide provides automotive crash repair and accident administration services to the UK insurance industry. With a national network of accident repair centres located across England, Scotland and Wales employing over 2,200 people, it is the largest dedicated provider of accident repair services in the UK. The company recently announced a major long-term extension of its contract with Royal & Sun Alliance and trading results in line with expectations.
Inspired Gaming Group PLC Cost: £16,002,000	6,890
Inspired Gaming Group is the leading player worldwide in the Open Server-Based Gaming (Open SBG™) market and is also the leading provider of analogue and Open SBG™ machines in the UK for the leisure and gaming markets. The group provides Open SBG™ software systems and Open SBG™ digital and networked terminals in 10 countries. The group's customer base includes bars, casinos, bingo halls, licensed betting offices, holiday parks and other out of home leisure venues. Key customers include the major gaming companies such as Gala Coral Group, William Hill, Betfred, Bourne Leisure and Stanleybet. Trading in the group is in line with expectations. The group is currently in discussions with various parties regarding offers received for certain of its divisions and for the group as a whole.
Essenden PLC Cost: £225,000	1,080
Essenden is the UK's largest operator of ten pin bowling alleys and operates under the Tenpin brand name. Although the business has been impacted by the recession in the UK, costs have been cut and the operating performance has been in line with market estimates. A new management team led by Nick Basing has joined the company with a view to maximising shareholder value over the next three years. Mr Basing previously ran Paramount which was a major success for NASCIT.
AssetCo PLC Cost: £849,000 *	511
AssetCo is the pioneering provider of integrated support services, vehicles and equipment to UK and overseas emergency services and homeland security organisations. It is at the forefront of providing support for the emergency services and has pioneered the development of the UK's most extensive range of integrated support services. AssetCo has established the UK's only Integrated Vehicle and Equipment Solution Centre and the UK's first dedicated Swift Water and Flood Rescue Centre. It has also established dedicated centres for Technology and Communications and Technical Rescue Training. *see also AssetCo Limited (Abu Dhabi) above.

Other AIM quoted investments	2,531

Total value of AIM quoted investments at bid value	41,712

group report of the directors

for the year ended 31 January 2010

The Directors present their Report (incorporating the Business Review) and the financial statements for the year ended 31 January 2010

The corporate governance statement below forms part of this Group Report of the Directors.

business review At 31 January 2010, the diluted net asset value ("NAV") per share was 1,169p (31 January 2009: 944p), an increase of 23.8% during the year, compared to a fall of 18.3% during the year in the Standard & Poor's 500 Composite Index (Sterling adjusted). As stated in the Chairman's Statement above, a significant part of the return for the year was achieved by specific actions taken by the Investment Manager, rather then through a recovery in the overall level of the stock market.

A review of the performance of the Company's business during the year (as required by section 417 of the Companies Act 2006) is included in the Chairman's Statement and Investment Manager Report incorporated into this Report by reference.

The key performance indictors for the company include NAV and share price. See below.

The Company has no employees and accordingly this business review does not contain any information regarding employees. As an investment trust, the Board do not believe that the Company's business has an impact on the environment and has not put into place any policies regarding social and community issues. The Board does not believe that this will change in the near future but, if it were to do so, they would immediately review these matters.

results and dividends The total net profit after taxation for the financial year ended 31 January 2010 amounted to £43,313,000 (2009: total net deficit £54,532,000). The Board do not propose a final dividend (2009: nil).

investment policy 1. The maximum investment limit is 15% of the Company's investments in any one company at the time of the investment.

2. Gearing is limited to a maximum of 30% of net assets.

3. The Company invests on both sides of the Atlantic, with the weighting varying from time to time.

4. The Company will invest in unquoted securities as and when opportunities arise.

investment approach The Company invests in a diversified range of companies, both quoted and unquoted, on both sides of the Atlantic in accordance with the above Investment Policy.

Christopher Mills, the Joint Investment Manager, is responsible for the construction of the portfolio and details of the principal investments are set out above. The top twenty largest investments are listed above.

When analysing a potential investment, the Managers will employ a number of valuation techniques depending on their relevance to the particular investment. The primary objective when deciding on a potential investment is the sustainability and growth of long term cash flow.

In respect of the unquoted portfolio, regular contact is maintained with the management of prospective and existing investments, as well as rigorous financial and business analysis of these companies. It is recognised that different types of business perform better than others depending on economic cycles and market conditions and this is reflected within the range of investments in the portfolio.

The Company's activities have not changed in the year ended 31 January 2010 and the Directors anticipate that the Company will continue to operate on the same basis during the current financial year.

financial instruments The financial instruments employed by the Company primarily comprise equity and loan stock investments, although it does hold cash and liquid resources and various items such as debtors and creditors that arise directly from its operations. Further details of the Company's risk management objectives and policies relating to the use of financial instruments can be found in Note 18 to the financial statements below.

key performance The Directors regard the following as the key indicators pertaining to the Company's

indicators performance:

(i) net asset value per ordinary share

(ii) share price return

(iii) performance against benchmark

The performance of the Company's share price is measured against the Standard & Poor's 500 Composite Index and the Russell 2000 Index, the Company's benchmarks.

future prospects The Directors believe that the year ending January 2011 will see further progress, especially from the unquoted portfolio which continues to offer the potential for further significant appreciation.

taxation status In the opinion of the Directors, the Company has conducted its affairs so as to be able to seek approved investment trust status from Her Majesty's Revenue & Customs under Section 842 of the Income and Corporation Taxes Act 1988 for the accounting year ended 31 January 2010. Pursuant to arrangements between The Association of Investment Companies and Her Majesty's Revenue & Customs, who have agreed that written approval of investment trust status can be granted within the Corporation Tax Self Assessment Regime, written approval for all accounting years to 31 January 2009 has been granted.

share capital At 31 January 2010 the Company's issued share capital consisted of 14,824,227 Ordinary Shares of 5p nominal value each. In April 2010, 100,000 Ordinary Shares were issued following the exercise of executive share options. Therefore at the date of this report the Company's issued share capital consists of 14,924,227 Ordinary Shares of 5p nominal value each. All shares hold equal rights with no restrictions and no shares carry special rights with regards to the control of the Company. There are no special rights attached to the shares in the event that the Company is wound up.

In addition, the Company has 3,587,825 units of Convertible Unsecured Loan Stock (CULS) 2013 of 5p nominal value in issue. Holders of CULS have the right to convert their stock into shares once a year and the Conversion Notice will be sent to the relevant holders with the Report and Accounts. There are no voting rights attached to the CULS. In the event of winding up the holders of CULS may be entitled to repayment of the principal amount of the stock together with accrued interest. Full details are provided in the Trust Deed date 26 November 1993.

share valuations 31 January 2010, the middle market quotation and the diluted net asset value per 5p Ordinary Share were 814.0p and 1,169p respectively. The comparable figures at 31 January 2009 were 618.5p and 944p respectively.

donations The Company does not make any political or charitable donations.

substantial At the date of this report, the following interests in the Ordinary Shares of the Company

shareholders which exceed 3% of the issued share capital have been notified to the Company:

	Number of	% of issued
	Ordinary Shares	share capital
C H B Mills	2,959,932	19.83
Lloyds Banking Group Plc	1,582,203	10.60
Henderson Global Investors Limited	758,324	5.08
J O Hambro Investment Management Limited	730,629	4.90
Findlay Park US Smaller Companies Fund Plc	595,000	3.99
Legal & General Group Plc	581,816	3.90
CG Asset Management Limited	525,759	3.52

directors In accordance with Article 55 of the Company's Articles of Association, Mr K Siem will retire by rotation at the forthcoming Annual General Meeting of the Company and, being eligible, offer himself for re-election.

In accordance with Listing Rule 15.2.13A, which requires Directors or members of the Manager to be subject to annual election, Mr C H B Mills is subject to annual election as he is both Chief Executive and a member of the Joint Manager and, accordingly, a resolution to re-elect him as a Director is included in the Notice of Annual General Meeting below.

The Chairman and other members of the Board recommend that the Directors retiring be re-elected. The Chairman has confirmed that all Directors retiring have been subject to performance evaluation and as part of this evaluation the Chairman confirms that they continue to demonstrate commitment to their role and in his view continue to responsibly fulfil their functions.

directors' interests The interests of the Directors as notified to the Company (beneficial unless otherwise stated) in the Ordinary Shares and Convertible Unsecured Loan Stock (CULS) 2013 of the Company as at 31 January 2010 and 31 January 2009 were as follows:

		31-Jan-10		31-Jan-09
	5p Ordinary	Units of	5p Ordinary	Units of
	CULS	Shares	CULS	Shares
The Hon. P D Moncreiffe	303,130	-	278,130	-
C H B Mills	2,836,932	-	2,777,150	-
K Siem*	-	-	-	-
C L A Irby	25,000	-	25,000	-
O R Grace	280,429	321,135	280,429	321,135
E F Gittes	200,000	-	200,000	-

* Siem Capital International Limited, a company which is indirectly controlled by a trust of which Mr Siem and his family are potential beneficiaries, is ultimately interested in 145,000 Ordinary Shares and 2,000 units of CULS (2009: 145,000 Ordinary Shares and 2,000 units of CULS).

Details of Directors' remuneration and interests in Share Options are described in the Directors' Remuneration Report below.

Subsequent to the year end, on 23 March 2010, The Hon. P D Moncreiffe purchased 90,000 units of CULS. In addition, on 16 March 2010, Mr Mills purchased 210,000 units of CULS and on 6 April 2010 he purchased 23,000 Ordinary Shares.

Save as disclosed below or in notes 4 and 9 to the financial statements, no Director was party to or had any interest in any contract or arrangement with the Company at any time during the year.

risk profile The Company's risk profile is set out in note 8 to the financial statements below. The principal risks to the Company and its Shareholders are investment risk, market price risk and foreign currency risk.

investment Pursuant to the Management, Administration and Custody Agreement dated 7 January

management 1993, as amended by the Amendment and Restatement Agreement on 19 March 2002,

agreements novated in November 2003 to North Atlantic Value LLP, the Joint Manager provides management and administration services to the Company.

The Management, Administration and Custody Agreement continues unless thereafter terminated by either party on not less than four months' notice in writing or may be terminated forthwith as a result of a material breach of the agreement or the insolvency of either party. No compensation is payable on termination of the Agreement. The Board reviews the activities of both the Joint Manager and the Chief Executive. The Chief Executive carries out day-to-day investment decisions for and on behalf of the Company. As part of this review, the Board is satisfied that the continuing appointment of the Joint Manager, on the terms agreed, is in the best interests of Shareholders.
Mr Mills has been Chief Executive of the Company since 1984 and the Board consider it is in the best interest of the Company for this arrangement to continue.

As part of this review, the Board has given consideration to the experience, skills and commitment of the Chief Executive in addition to the personnel, services and resources provided by the Joint Manager. The Company's performance over the last year is described in the Chairman's Statement on above. The Board considers that the arrangements between the Chief Executive and the Joint Manager continue to work well.

related party Mr Mills, the Chief Executive, is Chief Investment Officer and a member of North Atlantic

transactions Value LLP, Joint Manager to the Company. Mr Mills makes day-to-day investment decisions for the Company in his capacity as its Chief Executive and this position is distinct from his position as Chief Investment Officer of the Joint Manager. Mr Mills is a director and a substantial shareholder of J O Hambro Capital Management Group Limited, the holding company of the Corporate Company Secretary, J O Hambro Capital Management Limited and Designated Members of the Joint Manager. Mr Mills is a director and the sole shareholder of Growth Financial Services Limited ("GFS").

Pursuant to the Secondment Services Agreement between the Company, GFS and Mr Mills and the Management, Administration and Custody Agreement between the Company and North Atlantic Value LLP, Mr Mills is responsible for the day-to-day investment decisions in conjunction with the Joint Manager, North Atlantic Value LLP. The Secondment Services Agreement continues until terminated by the Company or GFS on not less than twelve months' notice. Details of the related party transactions and fees payable are disclosed in note 9 below. The Investment Management Fees are disclosed in note 4 below. The Performance Fee payable to GFS is disclosed in note 4 of the financial statements below.

With the exception of the matters referred to above, during the year no Director was materially interested in any contract of significance (as defined by the UK Listing Authority Listing Rules) entered into by the Company.

institutional investors - The Chief Executive and the Joint Manager, in the absence of explicit instruction from the

use of voting rights Board, are empowered to exercise discretion in the use of the Company's voting rights in respect of investments and to then report to the Board, where appropriate, regarding decisions taken. The Board has considered whether it was appropriate to adopt a voting policy and an investment policy with regard to social, ethical and environmental issues and concluded that it was not appropriate to change the existing arrangements.

creditors' payment It is the Company's policy to settle investment transactions according to the settlement

policy periods operating for the relevant markets. For other creditors, it is the Company's policy to pay amounts due to them as and when they become due. All supplier invoices received by 31 January 2010 had been paid (31 January 2009 - all supplier invoices paid).

soft commission The Joint Manager receives indirect benefits for certain investment services in the form of soft commission as a result of an agreement with a broker. The value of services supplied may depend upon a minimum threshold of commissions or a percentage of such commissions arising on dealings in securities for all clients including the Company. The practice of best execution is not compromised by this arrangement.

auditors A resolution to reappoint Grant Thornton UK LLP as the Company's Auditors will be proposed at the forthcoming Annual General Meeting.

further information on The following further information is disclosed in accordance with the Large and Medium-sized Companies and Group (Accounts and Reports)

share capital Regulations 2008:

· The Company's capital structure and voting rights are summarised above;

· Details of the substantial shareholders in the Company are listed above;

· The rules concerning the appointment and replacement of directors, are contained in the Company's Articles of Association and are discussed below;

· Amendment of the Company's Articles of Association and powers to issue on a pre-emptive basis or buy back the Company's Shares requires a special resolution to be passed by the Shareholders;

· There are: no restrictions concerning the transfer of securities in the Company; no special rights with regard to control attached to securities; no agreements between holders of securities regarding their transfer known to the Company; no agreements which the Company is party to that might affect its control following a takeover bid; and there are no agreements between the Company and its Directors concerning compensation for loss of office.

explanatory notes for The following resolutions (if passed) would allow the Board to issue Shares without first offering them to existing Shareholders.

special business at the Although the Directors have no current intention of exercising either of the authorities (if renewed) to allot Shares or disapply pre-emption rights,

annual general meeting they reserve the right to allot Shares at any time.

Resolution 6 - Ordinary Resolution - Renewal of Directors' authority to allot shares
The authority given to the Directors at the last Annual General Meeting to allot Shares expires at the conclusion of this year's meeting. Resolution 6 will renew the authority to allot Shares of the Company on similar terms. If Resolution 6 is passed, the Directors will have the authority to allot Shares up to the aggregate nominal amount of £248,737 representing one third of the current issued share capital. This authority will expire at the next Annual General Meeting of the Company or, if earlier, 15 months after the passing of this resolution.

Resolution 7 - Special Resolution - Renewal of Directors' authority for the disapplication of pre-emption rights
The authority given to Directors to disapply pre-emption rights expires at the Annual General Meeting. Resolution 7 will renew the disapplication of pre-emption rights thereby authorising the Directors to allot equity securities for cash up to a maximum aggregate renewal amount of £37,311 representing 746,211 Ordinary Shares of 5p each, being equivalent to 5% of the current issued share capital, without first offering such securities to existing Shareholders.

Resolution 8 - Special Resolution - Authority to purchase the Company's own shares
The authority given to Directors to purchase the Company's Ordinary Shares in the market expires at the forthcoming Annual General Meeting. Resolution 8 seeks the authority of Shareholders to purchase a maximum of 1,492,423 Ordinary Shares representing 10% of the current issued share capital. The Directors intend to exercise this authority only when, in the light of market conditions prevailing at the time and taking into account investment opportunities, appropriate gearing levels and the overall financial position, they believe that the effect of such purchases will be to increase the underlying value per Ordinary Share having regard to the interests of Shareholders generally. Shares will not be bought at a price of less than 5 pence each being the nominal value of each share nor more than 5% above the average middle market quotation of the shares over the preceding five business days nor will they be purchased during periods when the Company would be prohibited from making such purchases. Purchases will be made within guidelines set by the Board and using available reserves. Ordinary Shares purchased will be cancelled and the number of shares in issue reduced accordingly.

Resolution 9 - Special Resolution - Notice of general meetings
The authority given to Directors at last year's Annual General Meeting to call general meetings (other than an Annual General Meeting) on 14 days' notice will expire at the forthcoming Annual General Meeting. Resolution 9 seeks such approval. The approval will be effective until the Company's next annual general meeting, when it is intended that a similar resolution will be proposed. The Company will also need to meet the requirements for electronic voting under the Directive before it can call a general meeting on 14 days' notice.

The above resolutions are contained in the Notice of Annual General Meeting below.

Recommendation

The Board considers that resolutions 6 to 9 are likely to promote the success of the Company and are in the best interests of the Company and its shareholders as a whole. The Directors therefore unanimously recommend that you vote in favour of the resolutions as they intend to do in respect of their own beneficial holdings which amount in aggregate to 3,768,491 shares representing 25.3% of the voting rights of the Company.

By Order of the Board

J O Hambro Capital Management Limited
Company Secretary
Registered Office:
Ground Floor
Ryder Court
14 Ryder Street
London SW1Y 6QB

Registered No: 1091347
25 May 2010

directors' responsibilities in respect of the annual report & financial statements

for the year ended 31 January 2010

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. The financial statements are required by law to give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgments and estimates that are reasonable and prudent;

• state whether applicable International Financial Reporting Standards as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the Company and Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as the Directors are aware:

• there is no relevant audit information of which the Company's Auditors are unaware; and

• the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the Auditors are aware of that information.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility Statement required by Disclosure and Transparency Rule (DTR) 4.1.12

(i) To the best of our knowledge and belief the financial statements for the year ended 31 January 2010 give a true and fair view of the assets, liabilities, financial position and profit of the Company and Group and except as detailed in note 2 to the financial statements regarding non-consolidation of certain investments, have been prepared in accordance with the International Financial Reporting Standards adopted by the European Union (IFRS),

(ii) The Report of the Directors includes a fair review of the development and performance of the business and the position of the Company and Group together with a description of the principal risks and uncertainties that they face.

For and on behalf of the Board of North Atlantic Smaller Companies Investment Trust PLC

The Hon. P D Moncreiffe

Chairman

25 May 2010

independent auditor's report

to the members of north atlantic smaller companies investment trust plc

We have audited the financial statements of North Atlantic Smaller Companies Investment Trust plc for the year ended 31 January 2010 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statement of Changes in Equity, the Consolidated and Company Balance Sheets, the Consolidated and Company Cash Flow Statements and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

respective As explained more fully in the Directors' Responsibilities Statement set out above, the

responsibilities of Directors are responsible for the preparation of the financial statements and for being

directors and auditors satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

scope of the audit of A description of the scope of an audit of financial statements is provided on the

the financial statements APB's website at www.frc.org.uk/apb/scope/UKP.

qualified opinion on

financial statements

arising from limitation

in audit scope As explained in note 2, the Directors have not consolidated the investment in Bionostics Holdings Limited on the grounds that the information necessary for the preparation of consolidated financial statements cannot be obtained without disproportionate expense. In our opinion, the company should consolidate its controlling investment in Bionostics Holdings Limited in accordance with International Accounting Standard 27 'Consolidated and Separate Financial Statements'.

As also explained in note 2, the Directors have not consolidated the investment in TPEIII on the grounds that the holding at year end was based on the first close of the fund and that subsequent closings have reduced NASCIT's holding to 48%. In our opinion, the Company should consolidate its controlling investment in TPE III as at the balance sheet date in accordance with International Accounting Standard 27 'Consolidated and Separate Financial Statements'.

Except for the financial effect of not making the adjustments referred to in the preceding paragraphs, in our opinion:

• the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 January 2010 and of the Group's and the parent company's profit for the year then ended;

• the financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; and

• the Parent Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006.

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

opinion on other matters

prescribed by the companies

act 2006

In our opinion:

• the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and

• the information given in the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements

matters on which we are

required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

• the Parent Company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns; or

• certain disclosures of Directors' remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Under the Listing Rules, we are required to review:

• the Directors' Statement, set out above, in relation to going concern; and

• the part of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the June 2008 Combined Code specified for our review.

Julian Bartlett

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

London, England

25 May 2010

consolidated statement of comprehensive income

for the year ended 31 January

		2010			2009
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000

Investment income	3,525	-	3,525	4,285	-	4,285
Net gains/(losses) on investments at fair value through profit or loss	-	38,531	38,531	-	(54,325)	(54,325)
Currency exchange gains	-	1,087	1,087	-	7,042	7,042

total income	3,525	39,618	43,143	4,285	(47,283)	(42,998)

Expenses
Investment management fee *	(1,862)	(1,225)	(3,087)	(2,475)	(110)	(2,585)
Other expenses	(973)	-	(973)	(733)	-	(733)
Share based remuneration	-	-	-	(50)	-	(50)
Share of net return of associate	-	4,477	4,477	-	(7,677)	(7,677)

Profit/(loss) before finance costs and taxation	690	42,870	43,560	1,027	(55,070)	(54,043)

Finance costs	(242)	-	(242)	(487)	-	(487)

Profit/(loss) before taxation	448	42,870	43,318	540	(55,070)	(54,530)

Taxation	(5)	-	(5)	(2)	-	(2)

Profit/(loss) for the year	443	42,870	43,313	538	(55,070)	(54,532)

other comprehensive income	-	-	-	-	-	-

total comprehensive income/(loss) for the year	443	42,870	43,313	538	(55,070)	(54,532)

basic earnings/(losses) per ordinary share	2.99p	289.45p	292.44p	3.64p	(372.41)p	(368.77)p
diluted earnings per ordinary share	2.49p	230.93p	233.42p	2.92p	N/A	N/A

All of the profit for the year and the total comprehensive income for the year is attributable to the owners of the Group.

The total column of the statement is the Statement of Comprehensive Income of the Group. The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice issued by the Association of Investment Companies.

All items in the above Statement derive from continuing operations. No operations were acquired or discontinued in the year.

* Net of VAT refund

consolidated statement of changes in equity

for the year ended 31 January

			Share	Share
group	Share	CULS	options	premium	Capital	Revenue
	capital	reserve	reserve	account	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2010
31-Jan-09	740	29	1,348	629	177,766	(2,392)	178,120

Total comprehensive income for the year	-	-	-	-	42,870	443	43,313
Share Option expense	-	-	-	-	-	-	-
Exercise of Management Options	-	-	-	-	-	-	-
Premium paid on repurchase of CULS	-	-	-	-	(1,971)	-	(1,971)
Arising on conversion of CULS	1	(2)	-	-	-	-	(1)

31-Jan-10	741	27	1,348	629	218,665	(1,949)	219,461

			Share	Share
	Share	CULS	options	premium	Capital	Revenue
	capital	reserve	reserve	account	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2009
31-Jan-08	739	34	1,341	629	238,161	(2,930)	237,974

Total comprehensive income for the year	-	-	-	-	(55,070)	538	(54,532)
Share Option expense	-	-	90	-	-	-	90
Exercise of Management Options	-	-	(83)	-	-	-	(83)
Premium paid on repurchase of CULS	-	-	-	-	(5,325)	-	(5,325)
Arising on conversion of CULS	1	(5)	-	-	-	-	(4)

31-Jan-09	740	29	1,348	629	177,766	(2,392)	178,120

The financial statements have been prepared in accordance with the accounting policies below.

The notes below form part of these financial statements.

company statement of changes in equity

for the year ended 31 January

			Share	Share
company	Share	CULS	options	premium	Capital	Revenue
	capital	reserve	reserve	account	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2010
31-Jan-09	740	29	1,348	629	177,388	(2,014)	178,120

Total comprehensive income for the year	-	-	-	-	42,870	443	43,313
Share Options expense	-	-	-	-	-	-	-
Exercise of Management Options	-	-	-	-	-	-	-
Premium paid on repurchase of CULS	-	-	-	-	(1,971)	-	(1,971)
Arising on conversion of CULS	1	(2)	-	-	-	-	(1)


31-Jan-10	741	27	1,348	629	218,287	(1,571)	219,461

			Share	Share
	Share	CULS	options	premium	Capital	Revenue
	capital	reserve	reserve	account	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
2009
31-Jan-08	739	34	1,341	629	237,783	(2,552)	237,974

Total comprehensive income for the year	-	-	-	-	(55,070)	538	(54,532)
Share Options expense	-	-	90	-	-	-	90
Exercise of Management Options	-	-	(83)	-	-	-	(83)
Premium paid on repurchase of CULS	-	-	-	-	(5,325)	-	(5,325)
Arising on conversion of CULS	1	(5)	-	-	-	-	(4)

31-Jan-09	740	29	1,348	629	177,388	(2,014)	178,120

The financial statements have been prepared in accordance with the accounting policies below.

The notes below form part of these financial statements.

consolidated and company balance sheets

as at 31 January

	Group	Group	Group	Company	Company	Company
	2010	2009	2008	2010	2009	2008
	£'000	£'000	£'000	£'000	£'000	£'000
non current assets
Investments at fair value through profit or loss	179,670	147,505	231,820	195,375	158,733	250,748
Investments accounted for using the equity method	15,705	11,228	18,928	-	-	-

	195,375	158,733	250,748	195,375	158,733	250,748
current assets
Investments held by subsidiary companies for trading	634	-	308	-	-	-
Trade and other receivables	2,018	3,989	4,169	2,702	4,005	4,477
Cash and cash equivalents	29,600	25,514	8,504	29,550	25,498	8,504

	32,252	29,503	12,981	32,252	29,503	12,981

total assets	227,627	188,236	263,729	227,627	188,236	263,729

current liabilities
Bank loans and overdrafts	(5,864)	(7,874)	(9,356)	(5,864)	(7,874)	(9,356)
Investments held for trading - derivatives	(624)	(838)	(612)	(624)	(838)	(612)
Trade and other payables	(1,526)	(1,240)	(15,595)	(1,526)	(1,240)	(15,595)

	(8,014)	(9,952)	(25,563)	(8,014)	(9,952)	(25,563)

total assets less current liabilities	219,613	178,284	238,166	219,613	178,284	238,166

non current liabilities
CULS	(152)	(164)	(192)	(152)	(164)	(192)

	(152)	(164)	(192)	(152)	(164)	(192)

total liabilities	(8,166)	(10,116)	(25,755)	(8,166)	(10,116)	(25,755)

net assets	219,461	178,120	237,974	219,461	178,120	237,974

The financial statements have been prepared in accordance with the accounting policies below.

The notes below form part of these financial statements.

consolidated and company balance sheets

as at 31 January

	Group	Group	Group	Company	Company	Company
	2010	2009	2008	2010	2009	2008
	£'000	£'000	£'000	£'000	£'000	£'000
represented by:
Share capital	741	740	739	741	740	739
Equity component of CULS	27	29	34	27	29	34
Share options reserve	1,348	1,348	1,341	1,348	1,348	1,341
Share premium account	629	629	629	629	629	629
Capital reserve	218,665	177,766	238,161	218,287	177,388	237,783
Revenue reserve	(1,949)	(2,392)	(2,930)	(1,571)	(2,014)	(2,552)

total equity attributable to equity holders of the parent
	219,461	178,120	237,974	219,461	178,120	237,974

net asset value per ordinary share:
Basic	1,480p	1,204p	1,611p
Diluted	1,169p	944p	1,209p

The financial statements have been prepared in accordance with the accounting policies below.

The notes below form part of these financial statements.

These financial statements were approved by the Board of Directors on 25 May 2010 and
signed on its behalf by:

The Hon. P D Moncreiffe, Chairman

consolidated cash flow statement

for the year ended 31 January

	2010	2009
group	£'000	£'000
cash flows from operating activities
Investment income received	2,191	3,202
Bank deposit interest received	136	376
Other income	392	100
Purchase of investments by dealing Subsidiary	(839)	-
Sale of investments by dealing Subsidiary	8	-
Investment Manager's fees paid	(2,188)	(3,626)
Other cash payments	(472)	(466)

cash expended from operations	(772)	(414)
Bank interest paid	(306)	(457)
CULS interest paid	(18)	(19)

net cash outflow from operating activities	(1,096)	(890)

cash flows from investing activities
Purchases of investments	(120,767)	(153,593)
Sales of investments	128,383	172,624

net cash inflow from investing activities	7,616	19,031

cash flows from financing activities
Repayment of fixed term borrowings	(1,884)	(2,777)
Repurchase of CULS for cancellation	(1,984)	(5,357)
Management Options exercised	-	(83)

net cash inflow/(outflow) from financing activities	(3,868)	(8,217)

increase in cash and cash equivalents for the year	2,652	9,924

cash and cash equivalents at the start of the year	25,514	8,504
Revaluation of foreign currency balances	1,434	7,086

cash and cash equivalents at the end of the year	29,600	25,514

company cash flow statement

for the year ended 31 January

	2010	2009
company	£'000	£'000
cash flows from operating activities
Investment income received	2,191	3,202
Bank deposit interest received	136	223
Other income	365	8
Investment Manager's fees paid	(2,188)	(3,626)
Other cash payments	(472)	(467)

cash received/(expended) from operations	32	(660)
Bank interest paid	(306)	(457)
CULS interest paid	(18)	(19)

net cash outflow from operating activities	(292)	(1,136)

cash flows from investing activities
Purchases of investments	(120,767)	(153,593)
Sales of investments	128,383	172,624

net cash inflow from investing activities	7,616	19,031

cash flows from financing activities
Repayment of fixed term borrowings	(1,884)	(2,777)
Repurchase of CULS for cancellation	(1,984)	(5,357)
Management Options exercised	-	(83)
Short-term loans net (advanced)/repaid by subsidiary	(838)	230

net cash outflow from financing activities	(4,706)	(7,987)

increase in cash and cash equivalents for the year	2,618	9,908

cash and cash equivalents at the start of the year	25,498	8,504
Revaluation of foreign currency balances	1,434	7,086

cash and cash equivalents at the end of the year	29,550	25,498

The financial statements have been prepared in accordance with the accounting policies below.

The notes below form part of these financial statements.

notes to the financial statements

1 accounting policies

North Atlantic Smaller Companies Investment Trust plc ("NASCIT") is a Company incorporated in Great Britain and registered in England and Wales. The consolidated Annual Report for the Group for the year ended 31 January 2010 comprises the results of the Company and its Subsidiary - Consolidated Venture Finance Limited (together referred to as the "Group").

new standards and interpretations

The following standards and amendments to existing standards have been published and are mandatory for the Group's accounting periods beginning on or after 1 January 2009.

• IAS 1 (as revised in 2007) Presentation of Financial Statements. IAS 1 (2007) has introduced terminology changes (including revised titles for the financial statements) and changes in the format and content of the financial statements. In addition, the revised Standard has required the presentation of a third balance sheet and relevant notes at 1 January 2008, because the Company has applied a new accounting policy retrospectively, being the restatement of capital reserves where the presentation has changed such that realised and unrealised reserves are now shown as one reserve.

• Improving Disclosures about Financial Instruments (Amendments to IFRS 7 Financial Instruments: Disclosures). The amendments to IFRS 7 expand the disclosures required in respect of fair value measurements and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value hierarchy. The adoption of the amendment results in additional disclosures but does not have an impact on the Group's financial position or performance. The Group has elected not to provide comparative information for these expanded disclosures in the current year in accordance with the transitional reliefs offered in these amendments.

standards, amendments and interpretations effective on 1 January 2009 but with no impact

• IAS 23 (amendment), 'Borrowing costs';

• IAS 39 and IFRIC 9 (amendments), 'Embedded derivatives' (effective for all periods ending on or after 30 June 2009);

• IAS 39 and IFRS 7 (amendments), 'Reclassification of financial assets';

• IFRS 1 (amendment), 'First-time adoption of IFRS', and IAS 27, 'Consolidated and separate financial statements';

• IFRS 2 (amendment), 'Share-based payment';

• IFRS 8, 'Operating segments'; and

• IFRIC 15, 'Agreements for construction of real estates'.

IASB and IFRIC have issued a number of standards and interpretations which are not effective for the year ended 31 January 2010 and are not relevant for the Group's operations. The Directors have therefore chosen not to early adopt these standards and interpretations as they do not anticipate that they would have a material impact on the Group's financial statements.

standards, amendments and interpretations that are not yet effective and not relevant for the group's operations

• IAS 27 (revised), 'Consolidated and separate financial statements' (effective from 1 July 2009);

• IAS 39 (amendment), 'Financial instruments: Recognition and measurement' (effective from 1 July 2009);

• IFRS 1 (amendments), 'Additional exemptions for first-time adopters' (effective from 1 January 2010);

• IFRS 2 (amendments), 'Group cash-settled share-based payment transactions' (effective from 1 January 2010);

• IFRS 3 (revised), 'Business combinations' (effective from 1 July 2009);

• IFRIC 17, 'Distributions of non-cash assets to owners' (effective from 1 July 2009); and

• IFRIC 18, 'Transfers of assets from customers' (effective from 1 July 2009).

Improvements to IFRS' were issued in May 2008 and April 2009 respectively and contain numerous amendments to IFRS, which the IASB consider non-urgent but necessary. 'Improvements to IFRS' comprise amendments that result in accounting changes for presentation, recognition or measurement purposes as well as terminology or editorial amendments related to a variety of individual standards. Most of the amendments are effective for annual periods beginning on or after 1 January 2009 and 1 January 2010 respectively, with earlier application permitted. No material changes to accounting policies are expected as a result of these amendments.

(a) basis of preparation/statement of compliance

Except as disclosed in note 2, in relation to the non-consolidation of certain investments, the consolidated annual financial statements of the Group and the annual financial statements of the Company have been prepared in conformity with International Financial Reporting Standards ("IFRS"), which comprise standards and interpretations approved by the International Accounting Standards Board and International Financial Accounting Standards and Standing Interpretation Committee, interpretations approved by the International Accounting Standards Committee that remain in effect and to the extent they have been adopted by the European Union. They have also been prepared in accordance with applicable requirements of England and Wales company law and reflect the following policies which have been adopted and applied consistently. The financial statements have also been prepared in accordance with the Statement of Recommended Practice ("SORP") for investment trust companies, except to any extent where it conflicts with IFRS.

(b) convention

The financial statements are presented in Sterling rounded to the nearest thousand. The financial statements have been prepared on a going concern basis under the historical cost convention, except for the measurement at fair value of investments and derivatives designated at fair value through profit or loss.

The Group financial statements consolidate the financial statements of the Company and its wholly owned Subsidiary undertaking, Consolidated Venture Finance Limited, drawn up to 31 January 2010. Certain investments which meet the definition of subsidiary undertakings at the balance sheet date have not been consolidated within the Group financial statements and this is explained further in note 2.

Except as shown in (d) below, in accordance with IAS 28 (Investments in Associates), investments where the Company holds, directly or indirectly, more than 20% or more of the voting power of the investee, or otherwise has significant influence, are not accounted for as associates. Instead they are accounted for in the same way as other investments designated as at fair value through profit or loss.

In accordance with the exemptions given by s408 of the Companies Act 2006, the Company has not presented its own Statement of Comprehensive Income. The amount of the Company's profit for the financial year dealt with in the accounts of the Group is £43,313,000 (2009: £54,532,000 loss).

(d) oryx

NASCIT is in position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of Oryx. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over these policies. Oryx has been accounted for as an associate as it is considered to be a long term holding of the Company.

The results and assets and liabilities of Oryx are incorporated in the consolidated accounts using the equity method of accounting. Oryx is carried in the consolidated balance sheet at cost as adjusted by post-acquisition changes in the Group's share of the net assets of Oryx.

(e) segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment of business, being investment business. The Group invests in smaller companies principally based in countries bordering the North Atlantic Ocean. Geographical analysis of the portfolio is shown above.

(f) investments

All non current investments held by the Group, other than the investment in Oryx, are designated at 'fair value through profit or loss' on initial acquisition. Investments are initially recognised at fair value, being the value of the consideration given.

The Company's business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy and information about the portfolio is provided internally on that basis to the Company's Board of Directors and other key management personnel.

After initial recognition, investments are measured at fair value, with investment holding gains and losses on investments recognised in the Statement of Comprehensive Income and (apart from those on current asset investments) allocated to capital. Gains and losses on disposal are calculated as the difference between sales proceeds and cost.

Investments are included in the Balance Sheet on the following basis:

(i) quoted at market value on a recognised stock exchange

Securities quoted on recognised stock exchanges are valued at the market bid price and exchange rates ruling at the balance sheet date. With the exception of AIM quoted SETS stocks, which are valued using latest trade price, which is equivalent to the fair value.

Unexpired traded put and call options are held in current liabilities as investments held for trading - derivatives and are revalued to the prevailing fair value at the balance sheet date.

(ii) unlisted at market value

Treasury Bills are valued at fair value having been adjusted for movements in exchange rates between the dates of purchase and the year-end. Accrued income arising from them is included in debtors.

(iii) unquoted at directors' estimate of fair value

Unquoted investments, including the subsidiary, are valued in accordance with the International Private Equity and Venture Capital Association ("IPEVCA") guidelines. Their valuation incorporates all factors that market participants would consider in setting a price. The primary valuation techniques employed to value the unquoted investments are earnings multiples, recent transactions and the net asset basis. Valuations in local currency are translated into Sterling at the exchange rate ruling on the balance sheet date.

Included within the Statement of Comprehensive Income as at 31 January 2010, is a gain of £26,379,000 relative to the movement in the fair value of the unlisted investments valued using valuation techniques.

(iv) current asset investments

Investments held by the Subsidiary undertaking are classified as 'held for trading' and are valued at fair value in accordance with the policies set out in 1(f)(i) and 1(f)(iii) above for quoted and unquoted holdings respectively.

Profits or losses on investments in the Subsidiary are taken to revenue.

(g) options

Where put and call option transactions are entered into for investment purposes, the premiums received are taken to the Statement of Comprehensive Income and included as capital and the gains or losses arising on the valuations to fair value are recognised in the Income Statement and included as capital likewise.

Premiums received and gains or losses on revaluation are taken to the Capital Reserve. Where an option transaction is in profit at the year-end, the premium received on any open option is spread over the life of that option.

(h) foreign currency

The currency of the primary economic environment in which the Company operates (the functional currency) is pounds Sterling ("Sterling"), which is also the presentational currency of the Group. Transactions involving currencies other than Sterling are recorded at the exchange rate ruling on the transaction date. At each balance sheet date, monetary items and non-monetary assets and liabilities that are fair valued, which are denominated in foreign currencies, are retranslated at the closing rates of exchange.

Exchange differences arise on settlement of monetary items and from retranslating at the balance sheet date:

• investments and other financial instruments measured at fair value through profit or loss; and

• other monetary items are included in the Statement of Comprehensive Income and allocated as capital if they are of a capital nature, or as revenue if they are of a revenue nature.

Exchange differences allocated as capital are included in the transfer to Capital Reserve.

(i) trade date accounting

All "regular way" purchases and sales of financial assets are recognised on the "trade date" i.e. the day that the entity commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of the asset within a time frame generally established by regulation or convention in the market place.

(j) income

Dividends receivable on quoted equity shares are taken into account on the ex-dividend date. Where no ex-dividend date is quoted, they are brought into account when the Group's right to receive payment is established. Other investment income and interest receivable are included in the financial statements on an accruals basis. Dividends received from UK registered companies are accounted for net of imputed tax credits.

(k) expenses

All expenses are accounted for on an accruals basis and are allocated wholly to revenue with the exception of Performance Fees which are allocated wholly to capital, as the fee is payable by reference to the capital performance of the Group and transaction costs which are also allocated to capital.

(l) share based payments

In accordance with IFRS 2: Share Based Payments, an expense is recognised in the financial statements relating to the value of share options awarded under the 2002 Executive Share Option Scheme to the Chief Executive and employees of North Atlantic Value LLP.

The accounting charge is based on the fair value of each grant, measured at the grant date and is spread over the vesting period. The deemed expense is transferred to the Share Options Reserve.

(m) cash and cash equivalents

Cash in hand and at banks and short-term deposits which are held to maturity are carried at cost. Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Bank overdrafts that are repayable on demand, which form an integral part of the Group's cash management, are included as a component of cash and cash equivalents for the purpose of the Cash Flow Statement.

(n) bank loans and borrowings

All bank loans and borrowings are initially recognised at cost, being the fair value of the consideration received, less issue costs where applicable. After initial recognition, all interest bearing loans and borrowings are subsequently measured at amortised cost. Any difference between cost and redemption value has been recognised in the Statement of Comprehensive Income over the period of the borrowings on an effective interest rate basis.

(o) convertible unsecured loan stock ("culs") 2013

The CULS comprise of an equity element and a debt element, rather than just being treated as debt. The equity element was identified when the CULS were issued and reduces when the CULS are bought back. A CULS Reserve has been created to recognise the equity component.

(p) taxation

Tax on the profit or loss for the year comprises current and deferred tax. Corporation tax is recognised in the Statement of Comprehensive Income except to the extent that it relates to items recognised directly in Equity, in which case it is recognised in Equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years. The tax effect of different items of expenditure is allocated between revenue and capital on the same basis as the particular item to which it relates, using the Company's marginal method of tax, as applied to those items allocated to revenue, for the accounting period.

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax basis of assets and liabilities and their carrying amount for financial reporting purposes. Deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

(q) share capital and reserves

Share Capital represents the nominal value of equity shares.

Equity component of CULS represents the equity component of convertible unsecured loan stock issued.

Share Options Reserve represents the expense of share based payments. The fair value of Share Options is measured at grant date and spread over the vesting period. The deemed expense is transferred to the Share Options Reserve.

Share Premium Account represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

Capital Reserve represents realised and unrealised capital and exchange gains and losses on the disposal and revaluation of investments and of foreign currency items. In addition, performance fee costs are allocated to the Capital Reserve.

Revenue Reserve represents retained profits from the income derived from holding investment assets less the costs associated with running the Company.

2 non-consolidation of investments

In accordance with International Accounting Standards (IAS 27), consolidated financial statements are required to include all subsidiaries of the parent.

As at 31 January 2010 NASCIT held two portfolio investments in excess of 50%, Bionostics Holdings Limited (UK) ("Bionostics") and Trident Private Equity Fund III ("TPE III"). Having carefully considered the implications your Board have concluded that in the context of an investment company and in view of the envisaged short term nature of control and recognising the resources available to the Company, they regard it as misleading and impracticable to consolidate these investments as required by IAS 27. As a consequence the Company's auditors have included a specific qualification in their report in respect of this issue.

Brief details of the holdings and where appropriate a summary of the impact on NASCIT's accounts had the holdings been consolidated are included as follows:

bionostics

Shortly before the year end NASCIT increased its holding in Bionostics to 54.7%. Following the year end as a result of share issuance to employees of Bionostics, the Company's holding has reduced to 47.1%.

Based upon the most recent audited financial statements of Bionostics, dated 30 August 2009, the principal effect of consolidating would be to alter the composition of assets and liabilities of the group balance sheet as follows:

- to decrease:

a) investments at fair value through profit or loss by £19.1m

- to increase:

b) current assets by £6.3m

c) current liabilities by £3.0m

d) non current liabilities by £18.4m

- to include:

e) intangible assets (goodwill) of £35.9m

f) non current tangible assets of £1.0m

g) minority interest of £2.7m

There would not be a material net effect on Net Assets or on the reported net asset value per share.

Were the information available it would also be necessary to reflect 2 months of trading income and expenses in NASCIT's Statement of Comprehensive Income. In the absence of the relevant information it is not possible to quantify the affect this would have on profit for the year.

TPE III

At the year end NASCIT held 52.7% of TPE III. TPE III is a private equity fund which was launched in 2009. NASCIT's year end holding was based on the first closing of the fund, following subsequent closings NASCIT's partnership share now represents 48.0% of committed capital. It is proposed that NASCIT will use this vehicle to invest in all future private equity investments from 31 January 2010. TPE III was not consolidated as the Directors consider it to be an investment and it was known that NASCIT's percentage holding would be reduced on the second closing.

Based upon the latest management accounts of TPE III, the principal effect of consolidating would be to alter the composition of assets and liabilities of the group balance sheet as follows:

- to increase:

a) the total of non current assets by £5.3m

b) the total of current liabilities by £1.0m

c) minority interest by £4.3m

The trading activity of TPE III would not be material to the consolidated financial statements and there would be no material effect on the reported net asset value per share.

3 income

	2010	2009
	£'000	£'000
income from investments
UK dividend income	1,661	2,066
Unfranked investment income
- dividends	31	30
- interest	211	1,031
- interest reinvested	836	804

	2,739	3,931

other income
Interest receivable	133	378
Dealing losses of Subsidiary	(263)	(125)
Indemnity fee for investee company	-	5
VAT reclaimed on investment management fee	525	-
Sundry income	391	96

	786	354

Total income	3,525	4,285

	2010	2009
	£'000	£'000
total income comprises
Dividends	1,692	2,096
Interest	1,180	2,213
Other income	653	(24)

	3,525	4,285

	2010	2009
	£'000	£'000
income from investments
Listed UK	1,661	2,066
Unlisted UK	1,030	1,414
Unlisted Other	48	451

	2,739	3,931

4 investment management fee

(i) Pursuant to the Secondment Services Agreement, described in the Group Report of the
Directors above and the Directors' Remuneration Report above. Growth Financial Services Limited ("GFS") provides the services of Mr Mills as Chief Executive of the Company, who is responsible for day-to-day investment decisions. Mr Mills is the sole shareholder and a director of GFS. GFS is entitled to receive part of the investment management and related fees payable to GFS and North Atlantic Value LLP as may be agreed between them from time to time.

(ii) Pursuant to the terms of the Management, Administration and Custody Agreement, described above in the Group Report of the Directors, North Atlantic Value LLP is entitled to receive a fee (the Annual Fee) in respect of each financial period equal to the difference between (a) 1% of Shareholders' Funds (as defined) on 31 January each year and (b) the amount payable to GFS referred to in note 4(i) above. This fee is payable quarterly in advance.

As set out in note 9, no formal arrangements exist to avoid double charging on investments managed or advised by North Atlantic Value LLP.

(iii) The Performance Fee, calculated annually to 31 January, is only payable if the investment portfolio outperforms the Sterling adjusted Standard & Poors' 500 Composite Index and is limited to a maximum payment of 0.5% of Shareholders' Funds. The Performance Fee arrangements payable to GFS have been in place since 1984 when they were approved by Shareholders.

(iv) In addition to the management fees disclosed in note 4(ii) above, North Atlantic Value LLP is also paid the following:

- an activity fee of £225 per transaction as reimbursement of custodian and related transaction costs incurred on the Company's behalf.

- an investment management related fee of £100,000 per annum.

The amounts payable in the year in respect of investment management are as follows:

		2010			2009
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Annual fee	1,862	-	1,862	2,475	-	2,475
Performance Fee	-	1,102	1,102	-	110	110
Irrecoverable VAT thereon	-	123	123	-	-	-

	1,862	1,225	3,087	2,475	110	2,585

At 31 January 2010, £93,000 was payable to the Joint Manager in respect of outstanding management fees (2009: £124,000). At 31 January 2010, £1,102,000 plus VAT was payable to GFS in respect of outstanding performance fees (2009: £nil).

5 taxation on ordinary activities

	2010	2009
	£'000	£'000
Overseas taxation	5	2

	5	2

The current taxation charge for the year is different from the standard rate of corporation tax in the UK 28% (2009: 28.33%). The differences are explained below.

	2010	2009
	Total	Total
	£'000	£'000
Total return on ordinary activities before taxation	43,318	(54,530)

Theoretical tax at UK Corporation tax rate of 28% (2009: 28.33%)	12,129	(15,450)

Effects of:
Non taxable capital return	(12,004)	15,602
UK dividends which are not taxable	(469)	(585)
Increase in tax losses, disallowable expenses
and offshore income gains	344	433
Overseas tax which is not recoverable	5	2

Actual current tax charge	5	2

Factors that may affect future tax charges:

The Group has tax losses of £19,107,000 (2009: £16,890,000) that are available to offset future taxable revenue. A deferred tax asset has not been recognised in respect of those losses which will be recoverable only to the extent that the Group has sufficient future taxable revenue.

Of the Group tax losses shown above, the Parent Company has tax losses of £19,107,000 (2009: £16,890,000) that are available to offset future taxable revenue. A deferred tax asset has not been recognised in respect of those losses, which will be recoverable only to the extent that the Company has sufficient future taxable revenue.

The Company carries out its activities as an investment trust and the intention is to continue meeting the conditions required to obtain approval in the foreseeable future. Therefore, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.

6 return per ordinary share and net asset value per ordinary share

Consolidated return per Ordinary Share:

		Revenue			Capital			Total
	*Net return	Ordinary	Per Share	*Net return	Ordinary	Per Share	*Net return	Ordinary	Per Share
	£'000	Shares	pence	£'000	Shares	pence	£'000	Shares	pence
2010
Basic return per Share	443	14,810,713	2.99	42,870	14,810,713	289.45	43,313	14,810,713	292.44
Option conversion**	-	-		-	-		-	-
CULS***	19	3,753,120		-	3,753,120		19	3,753,120

Diluted return per Share	462	18,563,833	2.49	42,870	18,563,833	230.93	43,332	18,563,833	233.42

		Revenue			Capital			Total
	*Net return	Ordinary	Per Share	*Net return	Ordinary	Per Share	*Net return	Ordinary	Per Share
	£'000	Shares	pence	£'000	Shares	pence	£'000	Shares	pence
2009
Basic return per Share	538	14,787,546	3.64	(55,070)	14,787,546	(372.41)	(54,532)	14,787,546	(368.77)
Option conversion**	-	201,023		-	201,023		-	201,023
CULS***	21	4,173,720		-	4,173,720		21	4,173,720

Diluted return per Share	559	19,162,289	2.92	(55,070)	19,162,289	n/a	(54,511)	19,162,289	n/a

Basic return per Ordinary Share has been calculated using the weighted average number of Ordinary Shares in issue during the year.

* Profit for the year.
** Excess of the total number of potential Shares on Option conversion over the number that could be issued at average market price, as calculated in accordance with IAS 33: Earnings per Share.
*** CULS interest cost and excess of the total number of potential shares on CULS conversion over the number that could be issued at the average market price from the conversion proceeds, as calculated in accordance with IAS 33: Earnings per Share.

Consolidated net asset value per Ordinary Share:

The consolidated net asset value per Ordinary Share calculated in accordance with the Articles of Association is as follows:

	Net asset value per Share
	2010	2009	2008
Ordinary Shares - Basic	1,480p	1,204p	1,611p
- Diluted	1,169p	944p	1,209p

The basic net asset value per Ordinary Share is based on net assets of £219,461,000 (2009: £178,120,000; 2008: £237,974,000) and on 14,824,227 Ordinary Shares (2009: 14,795,548; 2008:14,775,208) being the number of Ordinary Shares in issue at the year end.

The diluted net asset value per Ordinary Share is calculated on the assumption that the outstanding 2013 CULS are fully converted at par and that all 1,017,500 (2009: 1,017,500; 2008: 1,030,000) Share Options were exercised at the prevailing exercise prices, giving a total of 19,429,552 issued Ordinary Shares (2009: 19,679,552; 2008: 20,322,052).

7 reconciliation of total return from ordinary activities before finance costs and taxation to cash (expended)/received from operations

	Group	Group	Company	Company
	2010	2009	2010	2009
	£'000	£'000	£'000	£'000
Total gains/(losses) from ordinary activities before finance costs and taxation	43,560	(54,043)	43,560	(54,043)
(Gains)/losses on investments	(39,618)	47,283	(44,095)	54,960
Share based remuneration	-	90	-	90
Share of net return of associate	(4,477)	7,677	-	-
Provision/(reverse) provision for Subsidiary	-	-	236	(120)
Dividends and interest reinvested	(837)	(804)	(837)	(804)
Increase/(decrease) in debtors and accrued income	(90)	636	(90)	636
Changes relating to investments of dealing Subsidiary	(568)	126	-	-
Increase/(decrease) in creditors and accruals	1,263	(1,377)	1,263	(1,377)
Tax on investment income	(5)	(2)	(5)	(2)

Cash (expended)/received from operations	(772)	(414)	32	(660)

8 financial instruments and risk profile

An explanation of the Group's financial risk management objectives, policies and strategy can be found in the Group Report of the Directors above.

The Group's financial instruments comprise its investment portfolio, cash balances, derivatives contracts, borrowing facilities, loan stock and trade receivables and trade payables that arise directly from its operations. Note 1 (above) sets out the accounting policies, including criteria for recognition and the basis for measurement, applied to significant financial instruments (excluding cash at bank and bank loans) which are carried at fair value. Note 1 also includes the basis on which income and expenses arising from financial assets and liabilities are recognised.

To support its investment in unquoted companies, the Group may periodically agree to guarantee all or part of the borrowings of investee companies. Provision is made for any costs that may be incurred when the Directors consider it likely that the guarantee will crystallise. Further details are shown under commitments giving rise to credit risk below.

The main risks arising from the Group's financial instruments are:

(i) market price risk, including currency risk, interest rate risk and other price risk;

(ii) liquidity risk; and

(iii) credit risk

The Company Secretary in close co-operation with the Board of Directors and the Joint Managers, co-ordinates the Group's risk management. The policies for managing each of these risks are summarised below and have been applied throughout the year.

(i) market price risk

The fair value or future cash flows of a financial instrument held by the Group may fluctuate because of changes in market prices. This market risk comprises currency risk, interest rate risk and other price risk. The Board of Directors reviews and agrees policies for managing these risks, which policies have remained substantially unchanged from those applying in the year ended 31 January 2009. The Joint Managers assess the exposure to market risk when making each investment decision and monitor the overall level of market risk on the whole of the investment portfolio on an ongoing basis.

The Company owns written put options, therefore there is a cap on the extent of any gains, but there is no cap on the extent of any losses.

currency risk

The functional and presentational currency of the Group is Sterling and, therefore, the Group's principal exposure to foreign currency risk comprises investments priced in other currencies, principally US Dollars. The Joint Managers monitor the Group's exposure to foreign currencies on a daily basis and reports to the Board on a regular basis. The Joint Managers measure the risk to the Group of the foreign currency exposure by considering the effect on the net asset value and income of a movement in the rates of exchange to which the Group's assets, liabilities, income and expenses are exposed.

Foreign currency borrowings and forward currency contracts are used to limit the Group's exposure to anticipated future changes in exchange rates which might otherwise adversely affect the value of the portfolio of investments. Where appropriate, they are used also to achieve the portfolio characteristics that assist the Group in meeting its investment objectives. These borrowings and contracts are limited to currencies and amounts commensurate with the asset exposure to those currencies. At 31 January 2010 the Group had no open forward currency contracts (2009: none).

Income denominated in foreign currencies is converted to Sterling on receipt. The Group does not use financial instruments to mitigate the currency exposure in the period between the time that income is included in the financial statements and its receipt.

The Group's financial assets comprise equity investments, fixed interest securities, derivatives, trade receivables and cash balances.

The Group finances its investment activities through the Group's Ordinary Share Capital, Reserves, derivatives and borrowings. The Group's financial liabilities comprise its multi-currency loan facility, bank overdraft, CULS, derivatives and trade payables.

At 31 January 2010, the currency cash flow profile of those financial assets and liabilities was:

group and company

	Canadian
	US Dollar	Dollar	Euro
	£'000	£'000	£'000
Non current investments at fair value through profit or loss	39,920	-	6,597
Trade and other receivables	1,401	-	-
Cash and cash equivalents	22,971	-	-
Multi-currency loan facility	-	-	(5,864)
Trade and other payables	-	-	(1)
Put options on investments	(624)	-	-

Total net foreign currency exposure	63,668	-	732

At 31 January 2009, the currency cash flow profile of those financial assets and liabilities was:

group and company

	Canadian
	US Dollar	Dollar	Euro
	£'000	£'000	£'000
Non current investments at fair value through profit or loss	34,611	-	5,590
Trade and other receivables	1,897	1,551	-
Cash and cash equivalents	24,812	1	-
Multi-currency loan facility	-	(1,119)	(6,755)
Trade and other payables	-	(20)	(63)
Put options on investments	(838)	-	-

Total net foreign currency exposure	60,482	413	(1,228)

Sensitivity analysis is based on the Group's monetary foreign currency financial instruments held at each balance sheet date and takes account of forward currency contracts that offset the effects of changes in currency exchange rates.

If Sterling had weakened against the US Dollar by 10%, this would have increased the net assets by £7,074,000 (2009: £6,720,000).

If Sterling had strengthened against the US Dollar by 10%, this would have decreased the net assets by £5,788,000 (2009: decrease of £5,498,000).

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as part of the currency risk management process used to meet the Group's objectives.

interest rate risk

Interest rate movements may affect;

• the fair value of the investments in fixed interest rate securities (including unquoted loans);

• the level of income receivable on cash deposits;

• the fair value of the Company's issued CULS; and

• the interest payable on the Group's variable rate borrowings.

• the loan guarantee, and any amounts payable should the guarantee be called upon.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and borrowing under the multi-currency loan facility.

The Board reviews on a regular basis the values of the fixed interest rate securities and the unquoted loans to companies in which private equity investment is made.

The Group finances part of its activities through borrowings at levels approved and monitored by the Board.

Derivative contracts are not used to hedge against the exposure to interest rate risk.

At 31 January 2010 the Company has investments with exposure to variable rate interest rate risk totalling £14,468,000 (2009: £6,983,000) and investments with exposure to floating rate interest rate risk totalling £7,489,000 (2009: £13,865,000).

The Company also has borrowings with exposure to fixed rate interest rate risk totalling £5,864,000 (2008: £7,874,000).

loans and borrowings

	Effective		31-Jan	31-Jan
group and company	interest rate	Maturity	2010	2009
			£'000	£'000
current
Bank overdraft	5.15%	On demand	-	-
Term loan - Canadian $nil (2009: $2 million)	n/a	13-Feb-09	-	1,119
Term loan - Euro €6.8 million (2009: €7.6 million)	2.89%	25-Feb-10	5,864	6,755

non current
CULS	5.00%	31-May-13	152	164
			6,016	8,038

maturity dates of financial liabilities

		31-Jan	31-Jan
	Maturity	2010	2009
		£'000	£'000
principal amounts payable on maturity:
Term loan - Canadian $nil million (2009: $2 million)	-	-	1,119
Term loan - Euro €6.8 million (2008: €7.6 million)	25-Feb-10	5,864	6,755
CULS	31-May-13	152	164

Interest payable on maturity:
Term loan - Canadian $nil million (2009: $2 million)	-	-	20
Term loan - Euro €6.8 million (2008: €7.6 million)	25-Feb-10	13	63
CULS*	31-May-13	60	84

*Gross amounts payable, split annually for each payment anniversary of 31 January, based on the outstanding principal at year end over the remaining term as at 31 January 2010 of 3.33 years (2008: 4.33 years). Assumes no further redemptions.

CULS

The Convertible Loan Stock 2013 (CULS) were issued in units of 5p each. The units are redeemable at par on 31 May 2013, unless previously redeemed, purchased by the Company, or converted at the option of the holder.

During the year ended 31 January 2010, 28,679 (2009: 20,340) units of CULS were converted into Ordinary Shares of 5p each at the rate of one 5p Ordinary Share for every unit of 5p. Also during the year ended 31 January 2010, the Company purchased 250,000 (2009: 630,000) units of CULS for cancellation at a total cost of £1,984,000 (2009: £5,330,000).

The CULS units are convertible into Ordinary Shares of 5p each at a rate of one Ordinary Share for every 5p unit, one month after despatch of the audited accounts in each of the years 2008 to 2013 inclusive.

Interest is payable to holders of the CULS at a rate of 0.5p gross per 5p unit per annum on 31 January each year.

The amount included in the table above of £152,000 (2009: £164,000) is the fair value of the financial liability element of the CULS as of its date of issue, as adjusted for the effective rate of interest, less interest paid to the unit holders and less the amount of CULS that has been purchased for cancellation or converted into Ordinary Shares.

term bank loans

As at 31 January 2010 the Company had a multi-currency loan Revolving Credit Facility of up to £9 million (which expires on 31 July 2010). All loan drawdowns are repayable in full on maturity, unless rolled over for a further agreed period.

Interest is payable on the loans on a quarterly basis and the rate is fixed for the duration of
the drawdown.

Both the interest due and the principal are payable in the relevant currency of the drawdown.

Further information on the financial liabilities is given in note 12 (multi-currency loan facility and bank overdraft) and note 14 (CULS) of the Annual Financial Report.

Sensitivity analysis is based on the Group's and Company's monetary financial instruments held at each balance sheet date with all other variables held constant.

If interest rates rose by 100 basis points this would increase net assets by £237,000 (2009: increase by £176,000).

If interest rates fell by 100 basis points this would decrease net assets by £237,000 (2009: decrease by £176,000).

In the opinion of the Directors, the above sensitivity analyses are not representative of the year as a whole, since the level of exposure changes frequently as borrowings are drawn down and repaid during the year.

other price risk

Other price risks (i.e. changes in market prices other than those arising from currency risk or interest rate risk) may affect the value of the quoted and unquoted investments.

The Group's exposure to price risk comprises mainly movements in the value of the Group's investments. It should be noted that the prices of options tend to be more volatile than the prices of the underlying securities. As at the year-end, the spread of the Group's investment portfolio analysed by sector was as set out above.

The Board of Directors manages the market price risks inherent in the investment portfolios by ensuring full and timely access to relevant investment information from the Joint Manager. The Board meets regularly and at each meeting reviews investment performance. The Board monitors the Joint Managers compliance with the Company's objectives and is directly responsible for investment strategy and asset allocation.

When appropriate, derivative contracts are used to hedge against the exposure to price risk.

The Group's exposure to other changes in market prices at 31 January 2010 on its quoted and unquoted investments and options on investments was as follows:

	Group	Company	Group	Company
	2009	2009	2009	2009
	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss
- Non current investments at fair value through profit or loss	179,670	195,375	147,505	158,733
Financial assets at fair value through profit or loss and held for trading
- Current asset investments	634	634	-	-
Current liabilities
- Put options on investments	(612)	(612)	(838)	(838)

The following table illustrates the sensitivity of the profit after taxation and net assets to an increase or decrease of 10% in the fair values of the Group's equities. This level of change is considered to be reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the Group's equities and equity exposure through options at each balance sheet date, with all other variables held constant.

	2010		2009
	Increase in	Decrease in	Increase in	Decrease in
	fair value	fair value	fair value	fair value
	£'000	£'000	£'000	£'000
Increase/(decrease) in net assets	17,967	(17,967)	14,751	(14,751)

(ii) liquidity risk

This is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.

The Group has investments totalling £35.8 million in equities and other investments that are readily realisable. It has derivative liabilities of £0.6 million as shown in note 10(e). The Group had a multi-currency loan facility of £9.0 million and an overdraft facility of US$15.6 million as at 31 January 2010. Details of contractual maturities of the financial liabilities together with contractual amounts of interest payable are shown above.

(iii) credit risk

The Group does not have any significant exposure to credit risk arising from any one individual party. Credit risk is spread across a number of counterparties, each having an immaterial effect on the Group's cash flows, should a default happen. The Company assesses the credit worthiness of its debtors from time to time to ensure they are neither past due or impaired.

The maximum exposure of the financial assets to credit risk at the balance sheet date was as follows:

	2010	2010	2009	2009	2008	2008
	Group	Company	Group	Company	Group	Company
	£'000	£'000	£'000	£'000	£'000	£'000
financial assets neither past due or impaired
Fixed income securities	14,468	14,468	6,983	6,983	13,376	13,376
Preference shares	26,028	26,028	25,321	25,321	15,893	15,893
Treasury Bills	7,489	7,489	13,865	13,865	20,336	20,336
Accrued income and other debtors	1,593	996	3,957	3,294	3,401	2,920
Cash and cash equivalents	29,600	29,550	25,514	25,498	8,504	8,504

	79,178	78,531	75,640	74,961	61,510	61,029

The maximum credit exposure of financial assets represents the carrying amount.
There are no financial assets that are past due or impaired.

commitments giving rise to credit risk

Pursuant to an agreement dated 14 October 2009, the Company provided a guarantee to National Westminster Bank ("the bank") as a condition of lending to Hampton Investment Properties Limited ("HIPL"). In support of the guarantee the Company was required to deposit a sum of £5.02 million in an account in the name of the Company, charged to the bank.

fair value of financial assets and financial liabilities
The fair value for each class of financial assets and liabilities, compared with the corresponding amount in the balance sheet was as follows (trade receivables and trade payables, are excluded from the comparison, as their carrying amounts are a reasonable approximation of their fair value).

		31-Jan-10		31-Jan-09		31-Jan-08
		Balance		Balance		Balance
	Fair value	sheet value	Fair value	sheet value	Fair value	sheet value
financial assets	£'000	£'000	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss
- Non current assets	179,670	179,670	147,505	147,505	231,820	231,820
Financial assets at fair value through profit or loss and held for trading
- Current asset investments	634	634	-	-	308	308
Loans and receivables
- Cash and cash equivalents	29,600	29,600	25,514	25,514	8,504	8,504
	209,904	209,904	173,019	173,019	240,632	240,632


		31-Jan-10		31-Jan-09		31-Jan-08
		Balance		Balance		Balance
	Fair value	sheet value	Fair value	sheet value	Fair value	sheet value
financial liabilities	£'000	£'000	£'000	£'000	£'000	£'000
Financial assets at fair value through profit or loss and held for trading
- Put options on investments	(612)	(612)	(838)	(838)	(612)	(612)
Other financial liabilities
- Multi-currency loan	(5,864)	(5,864)	(7,874)	(7,874)	(9,356)	(9,356)
- CULS	(29,115)	(152)	(25,036)	(164)	(45,259)	(192)
	(35,591)	(6,628)	(33,748)	(8,876)	(55,227)	(10,160)

fair values are derived as follows:

- Where assets and liabilities are denominated in a foreign currency, they are converted into Sterling using year-end rates of exchange.
- Financial assets (non current and held for trading) - as set out in the accounting policies above.
- Cash and cash equivalents, bank overdraft and multi-currency loan - at face value of the account.
- The Company's CULS - at the offer price at which they are quoted on the London Stock
Exchange.

The Company has adopted the amendment to IFRS 7, effective 1 January 2009. This requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy consists of the following three levels:

• Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

An active market is a market in which transactions for the asset or liability occur with sufficient frequency and volume on an ongoing basis such that quoted prices reflect prices at which an orderly transaction would take place between market participants at the measurement date. Quoted prices provided by external pricing services, brokers and vendors are included in Level 1, if they reflect actual and regularly occurring market transactions on an arms length basis.

• Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)

• Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company.The Company considers observable data to investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date, without adjustment for transaction costs necessary to realise the asset.

The table below sets out fair value measurements of financial assets in accordance with the IFRS fair value hierarchy system:

financial assets at fair value through profit or loss

At 31 January 2010

	Total	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000
Equity investments	157,713	77,514	-	80,199
Fixed interest investments	21,957	7,489	-	14,168

Total	179,670	85,003	-	94,667

financial liabilities at fair value through profit or loss

At 31 January 2010

	Total	Level 1	Level 2	Level 3
	£'000	£'000	£'000	£'000
Derivatives	(612)	-	(612)	-

Total	(612)	-	(612)	-

There have been no transfers during the year between Levels 1 and 2. A reconciliation of fair value measurements in Level 3 is set out below.

level 3 financial assets at fair value through profit and loss

At 31 January 2010

		Fixed
	Equity	Interest
	investments	investments	Total
	£'000	£'000	£'000

Opening balance	53,820	6,983	60,803
Purchases	71,065	11,679	82,744
Sales	(57,807)	(1,345)	(59,152)
Transfers into Level 3	604	-	604

Total gains or losses included in gains on investments in the statement of comprehensive income:
- on assets sold	2,279	(1,200)	1,079
- on assets held at the end of the year	10,238	(1,649)	8,589

Closing balance	80,199	14,468	94,667

Transfers into Level 3 relate to holdings that were listed in the prior year but became unlisted during the year to 31 January 2010.

Capital management policies and procedures

The Company's capital management objectives are:

- to ensure that the Company will be able to continue as a going concern, and
- to maximise the income and capital return to its equity Shareholders through an appropriate balance of equity capital and debt. The policy is that gearing should not exceed 30% of net assets.

The Company's capital at 31 January comprises:

	2010	2009	2008
	£'000	£'000	£'000
Debt
Borrowings under the multi-currency loan facility	5,864	7,874	9,356
CUL	152	164	192
Equity
Equity share capital	741	740	739
Retained earnings and other reserves	218,720	177,380	237,235
	225,477	185,158	247,522
Debt as a % of net assets	2.7%	4.5%	4.0%

The Board, with the assistance of the Joint Managers monitor and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
- the planned level of gearing, which takes account of the Joint Managers' views on the market;
- the need to buy back equity Shares for cancellation, which takes account of the difference between the net asset value per share and the Share price (i.e. the level of share price discount or premium);
- the need for new issues of equity Shares; and
- the extent to which revenue in excess of that which is required to be distributed should be retained.

The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

The Company is subject to several externally imposed capital requirements, including:
- the bank borrowings under the multi-currency loan facility are not to exceed 35% of the adjusted net asset value and the minimum adjusted net asset value is £135m.

These requirements are unchanged since last year, and the Company has complied with them.

9 related party transactions

The Joint Manager, North Atlantic Value LLP, is regarded as a related party of the Company and acts as Investment Manager or Investment Adviser of the following companies in which the Company has an investment and from which companies the Joint Manager receives fees or other incentives for its services. The amounts payable to the Joint Manager are disclosed in note 4. The relationships between the Company, its Directors and the Joint Managers are disclosed in the Group Report of the Directors above.

The relevant companies and the annual fees receivable as derived from the last audited accounts are:

	Services	Fees
Oryx International Growth Fund Limited	Investment Advisory	£551,000
Trident Private Equity LP	Investment Advisory	Nil
Trident Private Equity II LP	Investment Advisory	£659,000
Trident Private Equity III LP	Investment Advisory	£479,000

J O Hambro Capital Management Limited (the Corporate Company Secretary) is a Designated Member of North Atlantic Value LLP.

Christopher Mills is Chief Investment Officer and a member of North Atlantic Value LLP. He is also a substantial shareholder of J O Hambro Capital Management Group Limited (one of the two Designated Members of North Atlantic Value LLP) and the holding company of the Corporate Company Secretary.

disclosure of interests

Christopher Mills, the Chief Executive and Investment Manager is also a director of Oryx International Growth Fund Limited (Oryx).

North Atlantic Value LLP is investment manager to Oryx and investment adviser to Trident Private Equity II LP and Trident Private Equity III LP receives fees from them.

Christopher Mills is also a director of the following companies in which the Company has an investment or may have had in the year and/or from which he may receive fees or hold options or shares: Castle Support Services PLC, Catalyst Media Group PLC, Sunlink Health Systems Inc, Crucible Equity Limited, Bionostics Limited, Hampton Trust Group, GEIGroup Limited, Izodia PLC, Jarvis Porter Group PLC, Mid-States PLC, Paramount Restaurants Limited, Second London American Trust PLC (in members' voluntary liquidation), Prime Focus London PLC, Trident North Atlantic Fund, Oryx International Growth Fund Limited, Worldport Communications, Inc, Glass America, Inc, Sterling Construction, Inc, Progeny, Inc, Inspired Gaming Group PLC, Cross Border Limited and MJ Gleeson PLC,. Employees of the Joint Manager may hold options over shares in investee companies. A total of £142,000 in directors fees from these companies was received by Christopher Mills during the year under review.

No formal arrangements exist to avoid double charging on investments held by the Company which are also managed or advised by Christopher Mills (Chief Executive) and/or the Joint Manager. Members and private clients of the Joint Manager (excluding Christopher Mills and the Chairman) hold 82,050 shares in the Company (2009: 82,050).

Members and employees of the Joint Manager, and institutional and private clients of the Joint Manager, North Atlantic Value LLP may co-invest in the same investments as the Company.

The Hon. P D Moncreiffe is a director of Credon Industrial in which the Company has an interest.

From time to time Directors may co-invest in the same investments as the Company.

Oliver Grace was a director of Second London American Trust Plc (in members' voluntary liquidation) and Oliver Grace and his associates hold 21,238,447 shares in Second London American Trust Plc (in members' voluntary liquidation).

transaction with other companies in the group.

At 31 January 2010 amounts due from the wholly owned subsidiary Consolidated Venture Finance Limited (CVF) were £1,281,000 (2008: £679,000).

10 commitments and contingent liabilities

(i) At the year-end, there were no unexpired call options (2009: none), giving the holder at any time prior to expiry, the right to purchase investments from the Group at the stated exercise price. As set out in note 1(g), the premiums received for writing such options and the movements in valuation of call options unexpired at the balance sheet date are recognised in the Capital reserve. The maximum potential liability to which the Group was exposed at the balance sheet date, in respect of call options, totalled £nil (2009: £nil).

(ii) At the year-end, there was one unexpired put option (2009: one), giving the holders at any time prior to expiry, the right to require the Group to purchase investments at the stated exercise price. As set out in note 1(g), the premiums received for writing such options and the movements in valuation of put options unexpired at the balance sheet date are recognised in the Capital reserve. At 31 January 2010, changes in the put option valuations showed a net gain of £184,000 (2008: £183,000 loss). The maximum potential liability to which the Group was exposed at the balance sheet date, in respect of put options, totalled £3,744,000 (2009: £2,081,000).

(iii) To support its investment in unquoted companies, the Group may periodically agree to guarantee all or part of the borrowings of investee companies. At the date of this report the company had an agreement with National Westminster Bank in respect of a loan to Hampton Investment Properties. Further information is shown under commitments giving rise to credit risk above.

(iv) Pursuant to an agreement in December 2009, the Company pledged its shares held in Glass America Inc for the benefit of Deerpath Funding LP as security against a term loan and revolving credit facility amounting to a total of $7,750,000 granted to Glass America. The pledgers in turn receive the benefit of the credit facilities.

(v) The Company has also committed to invest £19.7m in Trident Private Equity Fund III over the forthcoming months.

11 post balance sheet events

Subsequent to the year end, 100,000 options issued under the 1994 Executive Share Option Scheme and granted in 2000 were exercised at the exercise price of 677.57p per share. Furthermore, following a review of the remuneration scheme a majority of the option holders waived their rights to participate in the 2002 Executive Share Option Scheme. Therefore at the date of this report there were 42,500 options granted in 2005 in issue.

As part of the aforementioned review, it was agreed that, subject to the proceeds being reinvested in NASCIT shares and that those shares be held for a period of not less than two years, bonus payments totalling £3.6 million be paid to Mr Mills and to those eligible employees of NAV LLP.

On 26 February 2010, the Group's investment in Ramen Holdings Limited was written up to £418,395 from £200,000. In addition, the Group's entire investment of £1,084,411 in Payzone was written off.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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